Should Under-21’s Apply for a Credit Card? New Card Laws Make It Harder for 18-21 Year Olds to Get Approval


The Credit Card Accountability, Responsibility and Disclosure Act became U.S. law on 22 May 2009. Under-21’s will face tighter controls should they wish to apply for a credit card. These new card laws are specifically designed to prevent young people acquiring credit card debt before they are old and wise enough to make more informed decisions.

Under-21’s Who Apply for a Credit Card Face Fresh Restrictions

All under-21’s must meet one of the following criteria before they apply for a credit card:

  • They should have independent financial means to repay any outstanding credit card debt.
  • A parent, guardian or individual who is over-21 must agree to be a co-signer. This means that the co-signer is jointly liable for any debt that has been accrued.

Other Changes to Card Law

  • It is no longer permissible for a card provider to offer gifts to students in order to entice them to apply for a credit card.
  • Pre-screened card offers can no longer be sent to under-21’s unless that person has consented to receiving them in advance.
  • Credit limits cannot be automatically increased based on a FICO score alone. A limit can only be changed when the co-signer provides written permission.

Is it Sensible to Co-sign for a Credit Card?

Research by Sallie Mae showed that 84% of college students currently have a card; the average outstanding balance is $3,173. The amount owed will vary considerably between students and some will owe a lot more than the average. The co-signer is jointly liable for any credit card debt and missed or late payments will affect personal FICO scores. It could also get the student into bad spending habits from a relatively early age.

Apply for a Credit Card to Boost a FICO Score

A number of under-21’s apply for a credit card in order to improve their FICO score. Whilst a series of regular payments will achieve this objective, a more likely outcome is credit card debt. It is easy to develop a credit score in a few years, but it can take as long as a decade to undo the damage of missed and late payments.

The card laws have been reformed to prevent under-21’s from accruing credit card debt before they have sufficient life experience. Those who apply for a credit card will now need a co-signer. Whilst punctual card payments can improve FICO scores, there is ample time to achieve this objective later on.